April- June 2002
Don Hofstrand , value-added farm management specialist
Iowa agriculture has been going through a long process of farm consolidation that has reduced the number of farms and brought about the decline in economic activity in rural areas. In addition, the Farm Bill of 1996 removed the “safety net” surrounding production agriculture. This has caused farmers to become more vulnerable to the vagaries of commodity markets.
During January of 1998 I called together a group of farmers and agribusiness people from a six county area in North Central Iowa. I told them that it was an important time to focus on value-added agriculture projects. The group started meeting on a regular basis. We discussed what type of organization we wanted to develop and how it should be developed.
A business was formally incorporated in August of 1998 as a section 501 Cooperative. The cooperative is named Ag Ventures Alliance Cooperative and serves as a development organization for value-added ventures and businesses.
During the winter of 2001/2002, Ag Ventures Alliance brought two value-added investment opportunities to their members. One was Golden Oval Eggs which is financing a project to develop a joint venture to further process their egg products. The joint venture is with Inovatech, a research and development company that has developed new shelf-ready egg products to be offered by retailers. The further processing will occur at the Thompson site.
The other project that was brought to Ag Ventures members was a startup soybean processing cooperatives called Minnesota Soybean Processors. They have raised the capital to start construction of a 100,000 bushel per day soybean processing plant in Brewster , Minnesota . The plant is designed to handle identity preserved soybeans. Also, various value-added alternatives are being pursued.
Membership in Ag Ventures Alliance has reached almost 1,100. Most of the membership is in northern Iowa , but members live in more than half of Iowa counties. Membership is a one-time fee of $250. This has provided Ag Ventures with a financial pool of almost $275,000.
Current projects include another ethanol project located in northeast Iowa . A committee is examining the feasibility of a 20 million gallon ethanol plant that would also provide DDGS as feed for local farmers.
Another project involves a committee looking into forming a separate company that farmers could invest in that would start a farming operation in Brazil . Much attention has been direct at the agricultural expansion in Brazil . This expansion poses a competitive threat to Iowa farmers. Several Ag Ventures members are examining the idea of investing in Brazilian agriculture as a hedge against declining land values in the U.S. Of course, there is the profit potential of Brazilian agriculture also.
An Ag Ventures committee is focusing on energy related projects that would be farmer owned. These include wind generation, biomass, methane and other potential energy technologies.
During the past year, a committee has explored the potential of building a large-scale (2,000 cow) farmer-owned dairy facility in Calhoun County . In addition, the dairy committee has been exploring the potential for opening a chain of retail ice cream stores.
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July 11, 2006
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